Gaming Innovation Group Inc

OSE:GIG

Earnings Call Transcript 2020-Q1

[Jonas Amnesten, Equity Analyst]

Good day, and warm welcome to Gaming Innovation Group's Quarter Report Presentation and Q&A. My name is Jonas Amnesten. I'm an Equity Research analyst at Redeye with focus on the online gambling industry. I will also be the moderator during the Q&A session that will follow after the presentation, so in about 20 minutes. [Operator Instructions]And due to the extraordinary situation with the COVID-19 outbreak, we're going to have GiG's, CEO, Richard Brown; and CFO, Tore Formo with us through video link. Welcome, Richard and Tore, the stage is yours.

[Richard Brown, Chief Executive Officer]

Thank you very much, Jonas. Good morning, all, and thank you for joining us today for Gaming Innovation Group's Q1 interim report. Today's presenters: my name is Richard Brown. I'm the CEO. I am joined by Tore Formo, our Group CFO.And for those of you listening in who do not know the company, I would do a very quick introduction. GiG is an end-to-end iGaming solutions and supplier based on innovative technology with a global customer base. We currently have approximately 500 full-time employees in offices in Malta, Spain, Norway and Copenhagen. We have a platform that is licensed and certified in Malta, U.K., Sweden, Germany, Schleswig-Holstein, Spain, New Jersey, Iowa and a pending license in Croatia.In addition, we have an affiliate licenses in multiple U.S. states and in Romania in conjunction with a worldwide marketing reach. We have 33 new customers on the platform. We operate across 3 main business divisions with a state-of-the-art iGaming platform supported by managed services, an end-to-end Sportsbook solution and a media affiliation business.I'll move now to the key takeaways from Q1. I am very pleased to see GiG returning to growth. We achieved quarter-on-quarter growth for the first time in 4 consecutive quarters. Also, the first quarter of 2020 was a very much transformational one for GiG, where we divested our B2C business unit to increase both the strategic focus and delivering a world-class B2B solution in conjunction with the strengthening of the balance sheet.I'm pleased to report also that after 3 quarters of decline, our Media division delivered double digit EBITDA growth and 9% revenue growth quarter-over-quarter. In the quarter, we also signed a multiyear contract extension to the platform with a large software-as-a-service customer and also agreed with them to take on 2 additional new brands into the regulated markets of Mexico and Romania in the latter part of this year. We also went live into the large online lottery space with the launch of MegaLotto.I'll move to the headline figures now. Just for the sake of clarity, we showed 2 sets of numbers here. One is with B2C as discontinued and one is B2C included. So the continued operations, i.e., the removal of the B2C, in Q1, we reached revenues of EUR 11.2 million, a growth of 7% quarter-over-quarter and then EBITDA improved to a positive EUR 0.6 million, which was up for the second quarter in a row. As a total, revenue came in at EUR 31.1 million, 6% growth versus Q4.EBITDA was down largely off the back of the normalized -- a very normalized level of investment into marketing within B2C in comparison to Q4.I will touch also now on the strategic direction. As I mentioned at the beginning, the quarter was a transformational one for GiG. In November 2019, we initiated a strategic review with the objectives to reduce the complexity in the business and focus on the real value creation within that, strengthen the balance sheet as well. We wanted to decrease the overall financial risk, to decrease the strategic risk and increase the earnings stability and quality and therefore, leading to an improved basis for the company's valuation. The main strategic direction, therefore, was to focus on the B2B operations and create the ambition to become a global Tier 1 B2B provider. And the consequence of that was to divest the B2C gaming operations.There was multiple upsides within the transaction. So in February, we signed an SPA with Betsson Group who would acquire the B2C operations and comprising of the operator brands, Rizk, Guts, Thrills and Kaboo. We received total EUR 31 million initial cash payment. Betsson also committed to keep the brands operational on GiG's platform for a minimum of 30 months. We also agreed a premium rate for the platform fee during those 24-month -- first 24 months and also entered into a Sportsbook partnership where we would integrate Betsson Sportsbook as a part of an agnostic platform offering.This, therefore, strengthens the financial position of the company considerably. We've reduced the complexity, enabling us to -- with the full financial and operational focus on some B2B ambitions. It improves our Sportsbook facilities via the strategic partnership as well as enhancing our sales opportunities.I will now touch on a business update. Firstly, cost savings and efficiency is something that we are driving continually through GiG, and we will continue to do so through the year. In the quarter, the overall head count dropped significantly. The tech costs were down by 11% quarter-over-quarter, as the team begins the infrastructure migration that will continue to deliver results throughout this year and into next.63 head count were transferred to Betsson in April as part of the agreement and an additional 54 will remain with GiG, supporting by a Transitional Service Agreement. We are also rolling out several other cost-saving initiatives and progressing according to plan. We expect to reduce the operating expenses further through the year and reduce head count to approximately 430 by the end of the year.In terms of Media Services, I'm extremely pleased to return to quarter-on-quarter growth. We delivered 9% in revenue and 13% in the EBITDA. Also one of our -- the main underlying KPI of the business, first time depositors, grew by 15% versus Q4. This was driven by a multitude of factors. We continued growth in the Paid Media division by expanding into the casino vertical. Comparable revenues for Paid were up 28% versus Q1 2019 and 30% quarter-over-quarter.The group growth in casino will offset -- we hope will dampen the impact of the sports revenue impacts from COVID-19 due to the closed sports events -- sporting events in sporting calendar. We've seen improved Google rankings across the board, in particular, in the sports vertical throughout Q1. And this we expect to lead to further growth when sports activity returns.We had very strong growth in the casino and publishing sector with 11% quarter-over-quarter in revenue and also 10% growth in first time depositors. We also embarked on a cost optimization program within the SEO, Content and Tech divisions in Media, in particular, in the publishing department, which led the EBITDA result to outperform revenue growth at 13%. During the last quarter as well, we launched several new growth projects to further diversify and increase our revenue streams and player intake, and we're already seeing healthy growth from several of those assets.We're maintaining the focus on developing the business further outside our current core markets in 2020, and of course, continuing to optimize and mature the organization throughout the year.In Platform Services, we delivered revenues of EUR 4.3 million and an EBITDA of minus EUR 1.6 million. The EBITDA was impacted mainly due to marketing-related activities in Q1, in particular, the focus on a leading trade show ICE in London, which should set us up for the year.Overall, there is a stable development if you consider that Q4 is seasonally stronger than the first quarter historically. The sales funnel within the platform is developing well over the past 3 months. However, land-based operators, which are a key market for GiG have, of course, faced some short-term challenges due to COVID-19, which has slowed some of the final contract negotiations.However, more than ever, I believe that these land-based operators see the importance of extending into online, and therefore, we see a positive mid- to long-term outlook in that market. Q2 has also started very strongly. Revenue was ahead in April, ahead of the Q1 average by 35%.In the Sportsbook or Sports Betting Services, the last time we presented, we spoke about possible joint ventures with partners to support the Sportsbook investment. However, obviously, due to the COVID-19, there's been interruptions to those plans. And in response to that, GiG has now rolled out a full restructuring plan of the Sportsbook division, that will lead to monthly savings in the region of EUR 400,000 per month within the division once the restructuring is complete.This puts the unit, we believe, into a sustainable financial position while retaining the strategic upside and the growth driver that having a Sportsbook provides. Sportsbook, I think, is the largest vertical within gaming, and GiG sees a real potential both in the less mature or emerging markets that are beginning their transformation into online as well as the middle market, and of course, the U.S., where we are currently live in 2 separate states.Progress is also being made with regards to the third-party solutions, integrations in the platform, as we maintain the vision to have a Sportsbook agnostic platform, and we have 2 integrations scheduled for 2020.Just to comment as well on the discontinued business on the B2C business, revenue grew quarter-on-quarter despite the normal seasonal impact of Q1 versus Q4 and contributed EUR 20 million in revenue to the group top line and EUR 1.2 million in EBITDA. Q4 saw a reversal of the accruals and some cost of sales and an unusually low marketing spend, as highlighted previously, which accounts for the impacted EBITDA quarter-on-quarter comparison.I will now touch on some of the events after the quarter before leading into a summary. The B2C divestiture was completed on the 16th of April and the SEK 300 million bond repaid. I'm happy also, as I mentioned earlier, the Platform Services was trading to 35% higher in revenue than the average in Q1 and 40% higher than the same period last year. We've also, as I mentioned, initiated the full restructuring of the Sportsbook department to bring the cost levels down. We are also [ happy ] to see stable revenues in Media and a continued monthly FTD growth despite the reduction in sporting events.So I am, therefore, very happy with how the second quarter has started, and it's an indication of the results of the work that we've put in throughout the company over the last quarters.In summary, I believe GiG showed a robust performance in Q1 and returning to quarterly growth, which I'm really pleased with. A major item in front of the company coming into the year was the balance sheet, which we've successfully improved via the divestiture of the B2C brands, while we've also strengthened our focus strategically as a dedicated and diverse B2B company. We continue to see the operational performance improve, confident the work that we're putting in will deliver the results in the coming quarter and in particular, the latter part of the year. We're in a healthy and sustainable position. We're placed -- well placed to grow on the financial performance of the business through 2020 and in turn the years ahead.And with that, I would like to thank you very much for your time and look forward to answering your questions.

[Jonas Amnesten, Equity Analyst]

All right. Thank you, Richard. That gave us a very good view of your quarter report. And let us follow-up with some questions. [Operator Instructions]And our first question regards to the Media Services. Which main markets were Media Services growing on during Q1?

[Richard Brown, Chief Executive Officer]

There's a combination across the board. We took some initiatives in paid for instance in the latter parts of the year with our [ existing ] and regulated markets like Romania and Belgium that have been driving some growth. We've also seen, in general, growth across the board in a lot of the assets that we own. But the majority of the growth is probably outside of the Nordics, the U.K. We see Central Europe grow as well. So it's pretty diverse growth, I would say, in that sense.

[Jonas Amnesten, Equity Analyst]

All right. Perfect. And for the Media Services, again, what's the impact of the fewer sport events during the end of Q1?

[Richard Brown, Chief Executive Officer]

It was really a couple of weeks at the tail end of March that we saw the impact. And as we kind of mentioned in our COVID trading updates, of course, we have revenue from Sportsbook in Media, which was impacted. However, we are seeing the growth in the other sectors, and over the quarter, actually, which we believe, as I kind of said, negates the full impact of that sports stoppage in the calendar.

[Jonas Amnesten, Equity Analyst]

Okay. Cool. And have you seen an increased interest for your omni-channel solution from land-based operators during 2020?

[Richard Brown, Chief Executive Officer]

We have, as I kind of mentioned or pointed to in the report. The sales funnel itself has done -- has developed quite well, especially as land-based operators. I think it's an event that's going to trigger the acceleration of the online adaptation of the land-based operators. So we've definitely seen an increase there. But of course, as I also mentioned, the impact to some of those that were in the latter part of the negotiation or phases is obviously understandable as well.

[Jonas Amnesten, Equity Analyst]

Okay. Cool. And next question also regards to Platform Services. What are the biggest holdback for land-based to the digital platform?

[Richard Brown, Chief Executive Officer]

I would say it's often regulatory driven. So one of the main drivers for the land-based casinos moving online is the clarification of regulatory environments. So once markets actually regulate online, where they have a -- they obviously have licensing for the land-based operations. So when those that trigger a regulation, which is a current recourse to go. And that's probably going to speed up actually, with events such as COVID. That will facilitate the land-based operations looking to go online.

[Jonas Amnesten, Equity Analyst]

And could you tell us more about your processes when signing core customers and how many customers are you targeting for 2020?

[Richard Brown, Chief Executive Officer]

I don't think I will comment on the actual number that we're targeting because we also want to make sure that we're not just looking at the volumes, but the quality of customers, the entire contract value, not necessarily just the volume of contracts coming in as of a few months.In terms of the process, it varies from client to client depending also where they are in the transformation, or in particular, in their regulatory stance. We see interest, for instance, with clients who know or believe that their markets will regulate within a period of time, say, 12 months to 18 months. So therefore, they are starting their journey now. Sometimes it can go quite quickly. It depends a little bit on where their target audiences are and the regulatory environments they're entering into.

[Jonas Amnesten, Equity Analyst]

Okay. And the compliance platform/tool you have developed, are there many competitors in that segment?

[Richard Brown, Chief Executive Officer]

I believe there's a couple in that segment. I believe that one of the things that we -- or at least marketing this tool itself was built off the back of the experience of both being B2C and a marketing provider as well. So we have an inherent and ingrained understanding of what makes that tool successful.

[Jonas Amnesten, Equity Analyst]

And a more general question regarding the U.S. operations. How is the U.S. as a market developing for you?

[Richard Brown, Chief Executive Officer]

We are seeing some positive movements in the casino sector in New Jersey. And that is a strong and quite mature market that we see. I think some growth coming through there. The Sportsbook market, I think, as everyone is seeing, is a long and complex road across the U.S. The regulatory environment there is very fragmented. But we're well positioned, I believe, the fact that we're into 2 U.S. states with the platform and with the Sportsbook is a testament to the technology and the ability for that to enter new markets quickly and efficiently and also having a kind of omni-channel solution there integrated into the retail sections as well I think it's a very strong offering that we have. But the market itself is taking time to mature and also open up in a multitude of states. It's also unlike the -- unlike Europe in some of the states is that they have a staggered rollout, [ Iowa ] as an example, although online betting is offered, you actually have to go to a casino in person to register for a period. And then after that period goes, then you can register online. So it's quite different from what the European market's adaptation of Sportsbook has been.

[Jonas Amnesten, Equity Analyst]

Okay. And you mentioned that the revenue from Platform Services in April were 35% higher than the Q1 average. Does this include the shift from the -- for the B2C to B2B? Or how -- what's the underlying performance?

[Richard Brown, Chief Executive Officer]

So there is a portion, obviously, of the transaction with Betsson, but that was only effective for 14 days of the month. So actually, the majority of the growth has been driven by the underlying or the existing customers on the platform. We've seen a couple of the clients that we onboarded during 2019 have started to scale and drive their operational performance as well as their figures internally. And in conjunction with that, some of the clients who we've had for a longer time have also stepped into a new growth phase, if you will. So therefore, that's the kind of the underlying factors that are driving the growth within the platform.

[Jonas Amnesten, Equity Analyst]

Okay. Cool. And was there a positive currency effect with the rise of the euro exchange rate and the payment for the bond in SEK?

[Richard Brown, Chief Executive Officer]

I'll pass that over to Tore, our group CFO, as well, to provide some flavor there.

[Tore Formo, Group Chief Financial Officer]

Yes, we had a positive effect in the accounts as of March, but that was for the whole bond due to the weakening of the Swedish krona to euro in -- and the date and agreement with Betsson, we had a gain of between 1.5 on the exchange rate when [ we closed ] deal. That effect was partly taken in the accounts as of March due to the exchange rates I mentioned, and there will also be an effect in April as well.

[Jonas Amnesten, Equity Analyst]

Okay. Perfect. And the next question, will there be a lower D&A in the coming quarters? When -- and when will you finish with the amortization of the affiliates from the period until [ 2070 ] and will we look at a positive net earnings in 2020?

[Richard Brown, Chief Executive Officer]

And so again, Tore, you can correct me if I'm wrong here, but the depreciation or the amortization of the affiliate assets is broken into 2 chunks. One is the player database, if you will, and the other one is the assets in the domain. And we will expect a decrease on that because the player database is amortized over a 3-year period. So most of those will start to expire as they progress through this year. The remaining part, which is on the domains and IP essentially will continue for another few years, but there will be a decrease throughout the year. And then we'll not be guiding on other than what we've already done for the year on revenue and EBITDA at this stage.

[Jonas Amnesten, Equity Analyst]

And next question, why did you spend so much marketing on the B2C segment in Q1, which had a negative impact on EBITDA? Was this a part of the Betsson deal?

[Richard Brown, Chief Executive Officer]

Not necessarily part, but I'll just point back as well. So the Q4 was an abnormally low level of marketing. And of course, while we were progressing with the aim of selling the B2C business, it wasn't definite until it was done the best. And so we needed to make sure that, that business was continually supported in the event that we were to maintain it for a period as well. We also ensure that the products we're selling over had a value. So it was important that they returned to normalized marketing levels, if you will.

[Jonas Amnesten, Equity Analyst]

And what will be the quarterly savings from Q1 2021 and onwards of downsizing to 430 full-time employees compared to 594 in Q1 2020?

[Richard Brown, Chief Executive Officer]

We have -- I mean I'm not going to comment exactly on the 2021 expectations as it's still 9 months away and we have potential opportunities coming in throughout the year. But that being said, we expect to optimize continually the OpEx quarter-over-quarter to get more and more efficient and deliver better and better results.

[Jonas Amnesten, Equity Analyst]

That makes sense. And how quickly will you be able to migrate all existing customers to the new real-time data platform?

[Richard Brown, Chief Executive Officer]

The anticipation is that we should be done probably Q3, maybe Q4, early Q4 at the latest. But we've already migrated. Obviously, MegaLotto was the first customer on that. And we're now in the planning and migration phase of the other clients, and they will be staggered across the year in order to make sure that the customers actually receive the benefit as quickly as possible, but also in the best possible way.

[Jonas Amnesten, Equity Analyst]

Okay. And how is the sale of GiG data development?

[Richard Brown, Chief Executive Officer]

Also, we're developing a sales pipeline now. We have to balance that. While we believe that is a significant addressable market and will be beneficial for GiG in the long run, we also need to ensure that the sales pipeline builds in accordance with our ability to make sure that we can migrate all of our existing customers in a timely fashion as well.

[Jonas Amnesten, Equity Analyst]

And next one is a bit long here. Several members of GiG leadership team are minimal financially invested in the company. I understand that this can't be commented specifically, but what are the management thoughts on having management not personally committed to the company, especially now that the founders have left?

[Richard Brown, Chief Executive Officer]

Okay. Again, I'm not going to comment on specific individuals' financial positions. However, I am a shareholder in the company, Tore is a shareholder in the company, and so is Ben Clemes, our Chief Commercial Officer also has a 2.5% stake in the company. So I don't believe that's -- I think it should be taken in terms of relativeness.Everyone's financial situation is different. So what may be -- it may be a large investment for others, maybe a small investment for some. So I think it's important to keep that in perspective. And I think we also need to ensure that -- I don't actually agree with the comment in that sense, but there are people who are invested in this company heavily. They believe in the company's long-term future.

[Jonas Amnesten, Equity Analyst]

Yes. Great. And what is the logic behind continuing with GiG's own Sportsbook when you already have signed a sport agreement with Betsson and potentially additional sportbook from another player as well?

[Richard Brown, Chief Executive Officer]

So the strategic here is based around -- there are different sportsbook requirements for different markets. It's important for GiG to retain a strategic position, both in the U.S., but also in terms of other emerging markets where we believe our Sportsbook will be able to deliver a significant proposition. However, of course, having a sports -- platform that is agnostic to Sportsbook enables us a greater opportunity to win contracts where for instance, if a third-party supplier -- Sportsbook is better in a certain market, then perhaps we wouldn't -- not -- wouldn't be able to do that.For instance, if you have an operator who is very -- wants to see Sportsbook around horseracing, for instance, perhaps that's not one scenario where our Sportsbook is focused on. It's important to be able to offer them a platform that has the capability to enter the sports betting market for their target audience. I think also it's important for us to be able to offer an end-to-end solution, in particular, for a lot of the land-based casinos who would like a sportsbook product, but would perhaps see it as a more supplementary. And again, being able to have full control ourselves and a full-scale offering will enable us to win those contracts as well.

[Jonas Amnesten, Equity Analyst]

And the next question is regarding the share price. So I guess you maybe can't comment that much on that, but I'll say it anyway. What are your thoughts on the quarter-on-quarter negative development of the share price and actions to prevent the downward spiral?

[Richard Brown, Chief Executive Officer]

I think I won't comment on the share price. But what I can comment on is the improved quarter-over-quarter performance within the company, which is what our main focus is on, and we will continue to focus on delivering quarter-on-quarter improvements, and we continue to build the business for the best long-term results within it. And also, therefore, ensure value creation for the shareholders over that time.

[Jonas Amnesten, Equity Analyst]

And do you see a strong growth going forward in the B2B segment since you're keeping your guidance for 2020?

[Richard Brown, Chief Executive Officer]

Yes. I do. I mean I think we can point back to the April figures on how this quarter started. It started strongly. So we believe firmly that we'll be able to achieve the results set out in the guidance.

[Jonas Amnesten, Equity Analyst]

Yes. Perfect. And what is the plan regarding the breakeven in the Sports Betting Services before Q3 '20 as stipulated in the 2022 bond documentation?

[Richard Brown, Chief Executive Officer]

So we have the -- we believe that the actions taken in the restructuring, in conjunction with some other items, will bring the segment into the profitability or into the breakeven structure.

[Jonas Amnesten, Equity Analyst]

Okay. And could you please elaborate on the company's plans for expansion in Asia?

[Richard Brown, Chief Executive Officer]

We don't necessarily -- we have anything specific set out in Asia. Asia is a complex regulatory environment. However, as markets regulate in that region, we will look to try and identify opportunities, and therefore, clients there.

[Jonas Amnesten, Equity Analyst]

Okay and could you comment on which third-party sportsbooks you are planning to integrate on the platform in 2020?

[Richard Brown, Chief Executive Officer]

We already have the Betsson one and the other one, I won't comment at this stage.

[Jonas Amnesten, Equity Analyst]

Yes. And Hard Rock was presented as a flagship customer, but does not seem to have added to the financial result of the company. What are the extent of the contract? And is it growing? And on top of that also, what are your thoughts on the future of this contract?

[Richard Brown, Chief Executive Officer]

I won't comment specifically on a client and their contract terms itself. I mean you can then -- as I said, the public -- the numbers are public for the New Jersey development, and I think there has been a positive development there with -- for Hard Rock over the last few months. So I think that's what I can really mention at this point.

[Jonas Amnesten, Equity Analyst]

Okay. And for the Media segment, what is the estimated intrinsic value of the publishing assets?

[Richard Brown, Chief Executive Officer]

Sorry, Jonas, can you repeat the question?

[Jonas Amnesten, Equity Analyst]

What is the estimated intrinsic value of the publishing assets? I'm not so sure what they are...

[Richard Brown, Chief Executive Officer]

Intrinsic value of the publishing assets are very, very high. Obviously, that segment runs at plus 60% EBITDA margin. It's the largest contributor in terms of revenue towards the Media Services. So the intrinsic value of it is, of course, very, very high.

[Jonas Amnesten, Equity Analyst]

Yes. All right. And GiG has focused heavily on communicating its sustainability position when it comes to responsible gaming. How is the GiG's position compared to competitors? And do you still see this as a USP and as a position that GiG can own?

[Richard Brown, Chief Executive Officer]

I wouldn't comment against the competitors perhaps, but what I will say is that I believe the sustainability and focus that we put on to responsible gambling is imperative for our business's long-term success as well. We strive to onboard clients who operate with the same ethos as we do. And we do believe that we can be successful in that arena continually.And I think it's a very important part of the business to be excellent in, so that we can help -- we see obviously, as regulators, either new regulations and/or regulators that are extending the [ remap ] of what is required both in terms of responsible gambling, sustainability and other areas, AML and such. It's imperative that we are a top performer within that segment so that we can continue to support our clients and also win new contracts.

[Jonas Amnesten, Equity Analyst]

Yes. And I guess you can see that also in the interest for your compliance platform. And next question, a more general one. What are you most pleased with in the Q1?

[Richard Brown, Chief Executive Officer]

I think it has to be the results from the Media division. Obviously, coming from that as a sector, and I think the new management team who came in at the end of last year in conjunction with the tremendous effort from all of the employees within that division to turn around the trend there and deliver double-digit EBITDA growth in from Q4 into Q1. I'm just exceptionally pleased with how well that has developed and how well they performed, especially not just in revenues, but also in that first-time depositors growth, which is the kind of driver for future growth as well.

[Jonas Amnesten, Equity Analyst]

Perfect. And could you -- there's another question about the Sportsbook. Could you give some more info regarding the Sportsbook and the plan going forward? When do you expect it to be profitable?

[Richard Brown, Chief Executive Officer]

I will go back to what I mentioned earlier a little bit there that we believe that the restructuring that we're undertaking now will put this division within -- into a sustainable and breakeven position. And we also believe that, therefore, from that, we can then look at growth again in that segment.

[Jonas Amnesten, Equity Analyst]

Okay. And next question, what is done to arouse interest for the company amongst institutional investors? Are there any new initiatives planned?

[Richard Brown, Chief Executive Officer]

Yes, it's unfortunately, the -- I'm basing on Marbella office and Spain is on a pretty heavy lockdown at the moment. So therefore, some of our plans have been somewhat interrupted, but we anticipate being able to go on a kind of marketing company drive and investor relations roadshows towards the latter end of the year including Capital Markets Days and such and also looking at various different markets and investor markets.

[Jonas Amnesten, Equity Analyst]

I guess that -- now difficult times regarding that. And next question, I guess, it's a bit difficult to answer or comment on. But anyway, are there any risk of a buyout of the company going forward?

[Richard Brown, Chief Executive Officer]

It's very difficult for me to comment on. We're a public company. And yes, this is very difficult for me to comment on.

[Jonas Amnesten, Equity Analyst]

Yes. And are you considering any new acquisitions?

[Richard Brown, Chief Executive Officer]

I think for the time being, what we would like to focus very much on is making sure that this company is performing, growing and improving continually. I think that would be the most prudent approach towards how this business should be done. I'm really excited about the results we're seeing in April, and I would like to continue to focus on those.

[Jonas Amnesten, Equity Analyst]

Yes, makes sense. And how do you see your cash flow situation?

[Richard Brown, Chief Executive Officer]

We have control over the cash flow situation. We are continuing to improve our operational performance. As I mentioned, we will also need to improve cash positions as the year goes past as well, as well as what we believe we will be able to deliver into 2021.

[Jonas Amnesten, Equity Analyst]

Yes. Perfect. I seem to have a quite large interest here because the questions continue to come in here. Do you expect further quarter-on-quarter growth this year?

[Richard Brown, Chief Executive Officer]

I'll relate back to our guidance, where we expect to achieve in the range of plus EUR 70 million in revenue as well in conjunction with an EBITDA result of between EUR 14 million and EUR 17 million.

[Jonas Amnesten, Equity Analyst]

Perfect. And are you considering introducing an employment stock purchase plan?

[Richard Brown, Chief Executive Officer]

Tore, maybe you want to answer that because we have some options set aside if we have certain funds to [ create it ].

[Tore Formo, Group Chief Financial Officer]

Yes. As far as I know, it has been discussed within the remuneration committee of the Board. So it's actually up to the Board to -- well, to make that decision and come up with a proposal. So we have to come back with more concrete on that issue going forward.

[Jonas Amnesten, Equity Analyst]

Okay. And do you see core growing in H2? And when do you see Betsson revenue coming into the books?

[Richard Brown, Chief Executive Officer]

Betsson revenue books will come into the books from April, as of the point of the divestiture, which was the 16th of April. And again, back to the guidance. So while I won't guide on specific quarter-on-quarter, we anticipate, especially with a strong start in April, the Platform business will continue to perform.

[Jonas Amnesten, Equity Analyst]

Perfect. And here we've got another question about Sportsbook. What exactly do you mean by getting the Sportsbook into a sustainable position? The EBITDA has been negative of EUR 1.8 million for the past quarters and the saving outlined in the Q1 report is only EUR 400,000, which means that it's still going to be negative by quarter going forward.

[Richard Brown, Chief Executive Officer]

It's EUR 400,000 per month, not in the total quarter. So that would be EUR 1.2 million of the EUR 1.8 million. And we also believe that we will be able to create a structure where the revenues will also be following into this. And therefore, it will be coming into a breakeven and sustainable position.

[Jonas Amnesten, Equity Analyst]

Yes. With GiG Media promoting GiG's brands heavily, will future revenue sharing income from the players be impacted negatively by higher [ shaving ] -- savings probably?

[Richard Brown, Chief Executive Officer]

So the blend of revenue -- I mean GiG Media was promoting the Rizk and such brands. However, there was never really a huge dependence on it. And also that was a blended revenue as well between revenue share and CPAs as well. Betsson were already a large customer of GiG Media as well. We also anticipate should they choose not to use GiG Media as a channel for marketing that we will be able to replace them. There's also already significant demand continually for the positions on our sites.

[Jonas Amnesten, Equity Analyst]

Okay. Do you expect a negative impact on revenue sharing income in GiG Media due to the bankruptcy in the wake of COVID-19?

[Richard Brown, Chief Executive Officer]

It's quite speculative. But on the other hand, I would say that one of the things, I think, we've been quite diligent with in GiG Media over the past several years is the choice of partners that we work with. We have often foregone perhaps new brands or maybe some brands that are slightly less sustainable in order to focus on the earnings quality over time. So therefore, I think we are well positioned in the event that, that were to happen, that we will be confident that the partners we work with are sustainable for any kind of economic downturn.

[Jonas Amnesten, Equity Analyst]

Yes. Perfect. And have you considered a stock buyback program?

[Richard Brown, Chief Executive Officer]

Tore, maybe you want to answer that because there are some bond covenants related to that.

[Tore Formo, Group Chief Financial Officer]

Yes. According to the current bond terms, we are not allowed to buy back any shares. So that gives us a restriction on that one, although we have proposed for the Annual General Meeting that the Board will have an authority to do that. So that's up to the shareholder to decide upon on the AGM in May.

[Jonas Amnesten, Equity Analyst]

Perfect. And is there any plans for listing GiG Media independently?

[Richard Brown, Chief Executive Officer]

That is not being discussed at the moment.

[Jonas Amnesten, Equity Analyst]

Perfect. And do you see a need for additional external capital going forward?

[Richard Brown, Chief Executive Officer]

At the moment, no, it's not something we're focused on at this point. It's impossible to speculate on those kind of things in the future, of course. But just like as of today, this is not something we're fully focused on.

[Jonas Amnesten, Equity Analyst]

Yes. But based on your current financial position, you see no need for that?

[Richard Brown, Chief Executive Officer]

We are very happy with the position that we're in. I think the repayment and particularly the bond in April was a significant event in order to reposition the company and strengthen the balance sheet.

[Jonas Amnesten, Equity Analyst]

Yes. Perfect. And the next question in regards to actually the Betsson. GiG got EUR 8 million in upfront payments for the Platform when Betsson bought GiG's or your B2C operations. When do you see that Betsson will start paying for the core platform?

[Richard Brown, Chief Executive Officer]

Well, they have already paid for the [ up until live ] amount, again, that would be -- I'm not going to comment on the specifics of another client's performance.

[Jonas Amnesten, Equity Analyst]

Yes. But I guess maybe they're talking about when you're going to start or that's going to start paying their [ own rolling ] fees, I guess. In that case, it should be from April, right?

[Richard Brown, Chief Executive Officer]

The revenue will, of course, be recognized from April when they took over.

[Jonas Amnesten, Equity Analyst]

Perfect. And -- okay. And we've got another question about Sportsbook. I think we have discussed that. Are you afraid that the brain drain in the company will hurt the company short or in the long term with a lot of people leaving the company since the Betsson deal?

[Richard Brown, Chief Executive Officer]

I'm very confident in the staff that we have within the organization. And I believe in them very much to be able to achieve the results that we're going to get. So that is not something I'm -- of course, every employer or every company will always be conscious of retaining its most key talent, but I believe that GiG provides an exceptional place to work and therefore confident of retaining the people who will be able to drive the company forward.

[Jonas Amnesten, Equity Analyst]

Yes. Perfect. And how many employees are you expected to be made redundant by the end of 2020?

[Richard Brown, Chief Executive Officer]

It's a combination. Obviously, we have some restructuring in sports ongoing. And then we've also the restructuring due to the B2C divestiture ongoing. So we've kind of guided on the estimated amount of head count that we will be going forward. And that's as much as I will say at this point.

[Jonas Amnesten, Equity Analyst]

Yes. Okay. And this is the last question. Have you considered with the Board to offer a more performance-based bonus type of commission for management instead of raise in salaries? According to the annual report, the cost of management shares has increased over 2019.

[Richard Brown, Chief Executive Officer]

Well, again, I'm not going to comment on specifics of people's salaries in this forum. And then that is up to the remuneration committee within the Board to decide on.

[Jonas Amnesten, Equity Analyst]

And we actually got one more question here. So what should we -- what is the most important thing to look at going forward in 2020 for GiG?

[Richard Brown, Chief Executive Officer]

I think it's the performance of the Platform Services, and obviously, the Media division. They are the parts of the company that we are putting our trust into, and we really believe we'll be able to drive the growth within this organization and grow the company.

[Jonas Amnesten, Equity Analyst]

Yes. Perfect. Perfect. Well, no more questions. So we'll wrap this up. I'd like to thank Richard and Tore for answering the extensive amount of questions today. And also, I'd like to thank our viewers for viewing, and I hope to see you all next time. And until then, take care and have a great day.

[Richard Brown, Chief Executive Officer]

Thank you very much.